> For the complete documentation index, see [llms.txt](https://docs.zestprotocol.com/start/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.zestprotocol.com/start/stacks-vaults/zvstbtc-vault/yield.md).

# Yield

Learn how the zvstBTC Vault combines Bitcoin Staking yield with sBTC borrowing, and how returns accrue to each vault share.

The zvstBTC Vault combines the Bitcoin Staking yield earned by stBTC with a borrowing and restaking loop on Zest Protocol.

The strategy posts stBTC as collateral, borrows sBTC against it and stakes that sBTC into more stBTC. This creates a larger stBTC position than the amount originally deposited.

The vault targets 6–8% APY. Realised returns depend on Bitcoin Staking yield, borrowing costs, utilisation, fees and market conditions.

### The foundation: stBTC

stBTC is Stacking DAO’s liquid, yield-bearing Bitcoin Staking token on Stacks.

Its backing and rewards are denominated in sBTC. As Bitcoin Staking rewards accrue, the amount of sBTC represented by each stBTC can increase over time.

Holding stBTC provides exposure to the base Bitcoin Staking yield. The zvstBTC Vault uses borrowing to target a higher return on the depositor’s original position.

### How the loop works

#### 1. Post stBTC as collateral

The vault posts stBTC as collateral on Zest Protocol’s Stacks lending market.

#### 2. Borrow sBTC

The vault borrows sBTC against that collateral within its configured risk limits.

#### 3. Stake the borrowed sBTC

The borrowed sBTC is staked through Stacking DAO into more stBTC.

#### 4. Repeat

The new stBTC is added as collateral, allowing the strategy to repeat the loop within its configured limits.

Each loop increases the stBTC position earning Bitcoin Staking yield. The strategy remains profitable only while the additional staking yield exceeds its borrowing costs, fees and other expenses.

### Example

Suppose the vault starts with 1 stBTC and, through looping, builds a position of approximately 2 stBTC while owing approximately 1 sBTC.

Bitcoin Staking yield accrues on the larger stBTC position. After borrowing costs and fees are deducted, the remaining return contributes to the vault’s net yield.

This is a simplified illustration, not a fixed leverage ratio or return. The actual position depends on risk parameters, available liquidity, borrowing costs and market conditions.

### Net asset value

The vault’s net asset value, or NAV, is the value of everything it owns minus everything it owes.

NAV = assets − liabilities

#### Assets

* stBTC held by the vault;
* stBTC posted as collateral on Zest Protocol;
* any idle strategy balances.

#### Liabilities

* sBTC borrowed to create the levered position;
* any other accrued strategy obligations.

The vault calculates NAV when required using its asset balances, liabilities and applicable exchange rates.

### Share price and return accrual

The value of each zvstBTC share is calculated as:

Share price = NAV ÷ total zvstBTC shares

When users deposit, they receive shares at the applicable share price. If the strategy generates a positive net return, NAV increases and each share represents more stBTC.

Returns therefore accrue through the share price. Users do not need to claim separate strategy rewards.

Share price can also decline if borrowing costs, fees or losses exceed the yield generated by the strategy.

### Performance fees

The vault charges a performance fee only on returns above its previous high-water mark.

The high-water mark records the highest share price on which a performance fee has already been charged. This prevents the vault from charging the same performance twice and avoids performance fees while the share price remains below that level.

The fee is collected by minting a corresponding number of vault shares to the protocol treasury rather than selling the vault’s stBTC.

### Risk management

The strategy uses controls intended to manage its levered position, including:

* configured collateral and borrowing limits;
* a deposit cap;
* exchange-rate sanity checks;
* a governance-set valuation haircut;
* onchain timelocks and emergency pause functions.

These controls reduce risk but do not eliminate it. Depositors remain exposed to smart-contract, liquidation, liquidity, oracle, borrowing-rate, stBTC and Bitcoin Staking risks.

### Summary

The zvstBTC Vault posts stBTC as collateral, borrows sBTC, stakes the borrowed sBTC into more stBTC and repeats within its configured limits.

Net returns accrue to the vault’s NAV and are reflected in the value of each zvstBTC share. Returns are variable and can be negative when costs or losses exceed the strategy’s income.